You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

June 13, 2024

Thailand Accepting Applications for Programmable Payment Regulatory Sandbox

Subscribe to Updates

The Bank of Thailand (BOT) has announced its new Enhanced Regulatory Sandbox, which provides an opportunity to experiment with currently restricted financial innovations under a controlled environment. The BOT is employing a thematic approach to determine the scope of technology or innovations that may participate in the Enhanced Regulatory Sandbox and will only accept applications in each theme for a limited period.

The first announced theme is “programmable payments,” which refers to payment and payment-related transactions with automatic execution upon the fulfillment of a predefined condition utilizing distributed ledger technology (DLT) and a smart contract or comparable technology in which electronic data units are issued on an electronic system or network. The application period for programmable payment testing in the Enhanced Regulatory Sandbox runs from June 13 to September 13, 2024.

A summary of the programmable payment testing framework under the Enhanced Regulatory Sandbox is provided below.

Scope

The Enhanced Regulatory Sandbox accepts applications for the following programmable payment activities:

  • Automated payment and settlement upon fulfillment of predefined conditions.
  • Escrow services with predefined delivery or transactional conditions.
  • Asset tokenization through issuance of digital tokens representing rights in an asset, with payment for tokens or payment of benefits or returns to holders of digital tokens occurring automatically when conditions are met.
  • Other testing related to the items mentioned above.

Requirements and Conditions

Programmable payment testing activities in the Enhanced Regulatory Sandbox must comply with the following requirements and conditions:

  • Electronic data units issued for programmable payment testing must be pegged to the Thai baht (THB) on a one-for-one basis (i.e., 1 unit = THB 1), with the float account storing THB equal to the value of the electronic data units issued.
  • Participants must define the redemption rights of the unitholders and proceed with the THB redemption according to the participants’ service level agreements.
  • Participants must have risk management, IT support, business continuity, and IT disaster recovery plans.
  • Participants must comply with know your customer (KYC), know your merchant (KYM), and customer due diligence (CDD) standards under the relevant laws and regulations of Thailand’s Anti-Money Laundering Office.
  • Participants must have a client suitability assessment process to prevent vulnerable customers from using services under the testing.
  • Participants must have measures to prevent the utilization of electronic data units for purposes outside the scope of testing (e.g., using the units as means of payment outside the scope of the test, listing the units on digital asset platforms, or using the units for investment or speculation purposes).

For more information on the BOT’s regulatory sandbox program, regulations on programmable payments, or any other aspect of fintech in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected], Pornpan Wichawut at [email protected], or Rujaporn Paritsantik at [email protected].

Related Professionals

Industries

Fintech

Location

RELATED INSIGHTS​ 

December 8, 2023
In a significant development on December 5, 2023, the Central Bank of Myanmar (CBM) issued Letter No. FE-1/2937 granting authorized dealer licensed banks (ADLBs) the authority to freely transact in foreign currency trades, buying and selling at the market exchange rate for Myanmar kyat (MMK) as proposed by buyers and sellers through online trading platforms. Offshore remittances, however, must comply with the remittance criteria set by the Foreign Exchange Supervisory Committee. The online trading platform Refinitiv, initiated in June 2022 under the CBM’s guidance, facilitates the buying and selling of foreign currency between ADLBs and between banks and customers. The initiative was implemented in accordance with CBM Letter No. FE-1/789, dated June 21, 2023. The platform’s inception saw the exchange rate set at over MMK 2,900 per USD 1. Then, in August 2023, the CBM ordered banks and traders to limit foreign exchange transactions to an approved online trading platform, again with the exchange rate fixed at MMK 2,900 per USD 1. Transactions outside of online trading platforms continue to be governed by the exchange rate set by the CBM of 2,100 MMK per USD 1. Conversion Rules for Exporters On December 6, 2023, the CBM issued Notification No. 26/2023 lowering the percentage of Myanmar companies’ export earnings in foreign currency subject to mandatory conversion into MMK from 50% to 35% at the current official exchange rate set by the CBM at USD 1 to MMK 2,100. This mandatory conversion must follow the requirements for mandatory conversion of foreign currency, which remain in effect. For more details on foreign exchange developments, or on any aspect of financial regulations in Myanmar, please contact Tilleke & Gibbins at [email protected].
Read More
December 7, 2023
Thailand’s Securities and Exchange Commission (SEC) has updated its regulations regarding public initial coin offerings (ICOs) that exhibit debt-like or infrastructure-backed characteristics. These new regulations are set to transform the landscape for digital fundraising, ensuring enhanced investor protection and risk mitigation. The introduction of these regulations is a major move toward cultivating a more transparent and secure digital token market in Thailand. It highlights the importance of comprehensive information disclosure and aligning digital-asset fundraising practices with established financial standards. The adjustments require more collaboration between token issuers and ICO portals to comply with the developing regulatory environment. The key features of the new regulations, which took effect on November 16, 2023, are summarized below. Debt-Like ICOs Debt-like digital tokens are digital tokens for which a fixed rate of return is predetermined. The rate does not vary based on the performance of the project or enterprise, but it may be supplemented by extra returns. To ensure that investors have access to adequate and essential information prior to making informed investment decisions, and to evaluate the risk of default by the issuer, the regulation requires disclosure of the project’s creditworthiness and risk assessment factors, as detailed below. Project creditworthiness. Disclosures about project creditworthiness should include information about the credibility assessment of the project, which should be conducted reasonably by an ICO portal or an independent expert. Risk assessment factors. Disclosures should include information about the factors considered in the assessment of risks—particularly the financial capability to repay the investment project’s debt. Infrastructure-Backed ICOs Infrastructure-backed digital tokens are issued for investment in infrastructure assets or to earn a share of the revenue stream from infrastructure projects. The regulations for the ICOs of these infrastructure-backed tokens have been revised to align with those for infrastructure trusts. These regulatory updates cover various aspects: Definition
Read More
November 27, 2023
Thailand’s Electronic Transaction Development Agency (ETDA) has released two new subordinate regulations under the Royal Decree on Digital Platform Services: one detailing the assessment of digital platform services (DPSs) that will be deemed “high-risk” and subject to additional obligations, and another setting guidelines on user verification and authentication for all DPSs. The two subordinate regulations are summarized below. Impact Assessment of DPS Operations Under the Royal Decree on Digital Platform Services, DPS operations that have the risk of seriously impacting financial and commercial security, reliability and credibility of data message systems, or the general public are subject to additional obligations. The first subordinate regulation mentioned above (officially titled Notification of the Electronic Transactions Commission Re: Criteria for Impact Assessment on Operation of Digital Platform Services) outlines the criteria for the ETDA to determine which DPSs are “high-risk.” DPSs falling under this designation include: DPSs whose total value of transactions conducted through the platform in Thailand exceeds THB 100 million (approx. USD 2.8 million) per year; DPSs whose operators have not registered their entities with the Department of Business Development (DBD)—notably overseas operators—and that have 100 or more merchants or business users in Thailand or total users in Thailand between 5 and 10 percent of the country’s population (i.e., approx. 3.3–6.1 million users, calculated using official 2022 figures); DPSs that allow their users to freely post certain messages, or do certain acts, that may affect the public in certain cases, such as: (1) unlawful messages or acts; (2) messages or acts that may affect a child’s rights or people’s fundamental rights; and (3) messages or acts that may negatively affect political opinions of Thai citizens (whether before or after an election) or statements or actions likely to negatively affect other individuals due to gender differences or sexual violence. After considering
Read More
November 17, 2023
On October 3, 2023, Thailand’s Board of Investment (BOI) issued a new regulation clarifying the eligibility criteria for investment promotion under the BOI category “5.10 Development of software, platforms for digital services, or digital content.” To be eligible for BOI promotion under the digital activity category, projects must meet criteria related to local development, minimum investment amount, machinery and equipment, and development processes. These criteria for category 5.10 activities, along with the latest clarifications from the BOI, are detailed in the table below. Tax Incentives The BOI also clarified the method for calculating corporate income tax (CIT) exemptions. The CIT cap amount is calculated on an annual basis from the prescribed expenses incurred after applying for BOI promotion and occurring during the year for which the CIT exemption is claimed. The allowances include 100% of expenses for salaries for newly hired Thai IT personnel, technology-related training, and obtaining quality standards (such as ISO 29110). The revenue of projects that qualify for CIT exemption must be from sales or services directly related to software, platforms for digital services, or digital content developed as promoted by the BOI, including licensing fees, subscription fees, pay-per-use expenses, in-app purchase fees, usage fees, revenue sharing, advertising fees, and so on. For more details on BOI promotion for digital activities, or on any aspect of investment promotion in Thailand, please contact Athistha (Nop) Chitranukroh at [email protected] or +66 2056 5600, Napassorn Lertussavavivat at [email protected] or +66 2056 5662, or Thammapas Chanpanich at [email protected] or +66 2056 5561.
Read More